It may affect the old-school currencies we use now. It may open up new business opportunities, as well as destroy some money transfer-related markets. It may also give an already powerful company access to the next batch of private information about us.
Facebook, the platform which collects all of our information, may also become our daily payment method…
Recently, the social media giant, alongside some of the leading financial companies, has announced plans to create a purely digital coin, which can become a worldwide accepted virtual currency.
The project, called Libra, mainly aims to empower people from less developed countries, where banking isn’t easily accessed. With an Internet connection and a mobile phone as a wallet, people will be able to easily make both domestic and international transactions for a fraction of today’s costs. It’s all thanks to blockchain technology, the same used for creating cryptocurrencies, such as Bitcoin or Ethereum, just to name some popular ones.
Cryptocurrencies as New Money
The idea behind Facebook’s project isn’t that new. There are already multiple digital coins, called cryptocurrencies, which offer cheap international transactions and secure money storage with strong encryption. However, there are still many obstacles before any attempts of wide adoption of such coins.
First of all, their values are still very volatile. It’s a brand new market, therefore there are many speculations and uncertainties, all of which drive the prices of certain coins up and down constantly. And, it’s hard to use a currency when you can’t be sure how much it’s going to be worth the next day.
Lack of official government regulations and acceptance in stores is also another problem…
Future of Payments?
However, Facebook’s currency may actually turn revolutionary. First of all, its value will be stable, as there will be real world assets backing it. Secondly, if they connect it to their social media platform, which already has millions of users and your Facebook App turns into a mobile wallet, there won’t be any adoption problems. Sending money to your friend may be as easy as sending them a message or liking their photo. Moreover, big financial companies backing the project may also help to push some official regulations for digital coins.
And, before we can even notice, there will be a financial revolution going on in terms of global payments. Currently, an international transaction can cost as much as $20. It takes up to three days to reach the recipient, and one may also need to exchange the currency. However, the cost of sending a blockchain-based transaction is as low as a few cents and the transfer reaches its destination after just a few seconds.
It may affect the old-school currencies we use now. It may open up new business opportunities, as well as destroy some money transfer-related markets. It may also give an already powerful company access to the next batch of private information about us. But, such an easy and convenient payment method will undoubtedly financially empower people in many parts of the world and finally give them equal opportunities. Access to Internet connections is becoming more and more available, but still in more remote or poorer places they simply can’t open bank accounts, take out loans, or gain interest on their money, or the available offer is multiple times more expensive than it should be, and they are cut out from the global financial world.